Growth Energy comments on CARB's LCFS re-adoption proposal

In response to the proposed amendments by California’s Air Resources Board to the California Low Carbon Fuels Standard regulation and the proposed regulation on the commercialization of alternative diesel fuels, Growth Energy filed extensive comments outlining Growth Energy’s opposition.

Growth Energy opposes adoption of the proposed amendments to the LCFS regulation and the currently proposed alternative diesel fuel (ADF) regulation, primarily because each regulation is unnecessary to achieve the environmental benefits sought by the California legislature in the Global Warming Solutions Act of 2006.

David Bearden, general counsel of Growth Energy noted, “If adopted, the current LCFS proposal will have a devastating impact on Growth Energy’s members, who will be forced to exit from the California alternative fuels market. Such an outcome will likely trigger the cost-containment caps in the proposed regulation, and any claimed benefits of the LCFS program will be compromised or lost.”

Specifically, the comments noted:

The LCFS regulation is no longer needed to achieve the greenhouse gas reductions sought in the 2009 LCFS regulation. Since the board first adopted the LCFS regulation in 2009, much has changed in efforts by the state and federal government to reduce greenhouse gas (GHG) emissions from motor vehicles. Growth Energy presented a proposed alternative to the LCFS regulation to CARB staff in June that would simply adjust California’s cap-and-trade regulation to account for any incremental GHG emission reductions forgone by eliminating the LCFS. Following review of Growth Energy’s proposal, the CARB staff agreed with Growth Energy that Growth Energy’s proposal would likely achieve the same level of GHG emissions reductions as the 2009 LCFS regulation through 2020. Growth Energy’s proposal had none of the unintended negative environmental consequences of the 2009 LCFS regulation, which have been the subject of litigation, and would have eliminated the need for California businesses and consumers to pay for the LCFS program ─ costs that the CARB staff now says may range up to about 12 cents per gallon by 2020.

The new justification for the LCFS regulation ignores the federal renewable fuels program. The CARB staff rejected Growth Energy’s proposed alternative to the LCFS regulation in the fall of 2014 because it claimed that by enforcing LCFS requirements now, CARB could prepare the California fuels market for further GHG reductions after 2020. The CARB staff theorized that only an LCFS program can adequately assure the diversification of the sources and methods of producing renewable fuels with low carbon emissions needed to achieve GHG reductions after 2020. When it rejected Growth Energy’s proposal last fall, the CARB staff did not properly account for the beneficial effects of the federal renewable fuels standards (RFS) program in stimulating fuels diversification and in the commercialization of cellulosic renewable fuels. The CARB staff still has not done so.

By disrupting the national market for renewable fuels, the LCFS regulation may increase global greenhouse gas emissions. Under the new LCFS regulation, corn ethanol produced at Midwest biorefineries will be displaced in large part by sugarcane ethanol from Brazil. Midwest corn ethanol biorefineries will be forced to choose between curtailing or shutting down production, or finding other markets for the ethanol that can no longer be sold in California. Because external economic factors constrain the output of the Brazilian sugarcane ethanol industry, and may continue to do so, the practical effect of the new LCFS regulation may cause the shipment of Brazilian ethanol to California, and Midwest ethanol to Brazil. The ethanol would travel on oceangoing tankers powered with fossil fuels. Intercontinental shipments of ethanol in response to California’s regulation would have the unintended effect of increasing global GHG emissions.